A federal appeals court has struck down a nearly 70-year-old prohibition on the registration of trademarks that the Patent and Trademark Office (“PTO”) deems “disparaging,” concluding that such a prohibition cannot withstand scrutiny under the First Amendment. The mark at issue is used by an Asian-American rock band named “The Slants,” whose application to register “The Slants” as a trademark was rejected by the PTO on the basis that it was disparaging to people of Asian descent.

Trademarks and the First Amendment

The court set the stage by outlining the numerous benefits of federal trademark registration, which include the right to exclusive nationwide use of the mark where there has been no prior use by others, incontestability of the mark after five years of consecutive post-registration use, the right to prevent cybersquatters from misappropriating the markholder’s domain name, and the ability to obtain assistance from U.S. Customs and Border Protection in restricting importation of infringing or counterfeit goods. Reasoning that the potential denial of such benefits creates a “serious disincentive” to adopt a mark that the government might later refuse to register upon a finding that the mark is disparaging or offensive, the court concluded that the disparagement provision of Section 2(a) of the Lanham Act has a “chilling effect” on speech that implicates, and violates, the First Amendment.

Notably, the court characterized the use of a disparaging mark as private speech rather than commercial speech for purposes of its First Amendment analysis, reasoning that the disparagement exclusion targets the mark’s expressive character rather than its commercial function as a source identifier. The upshot of this distinction is that the government was required to meet the highest possible burden of showing that the disparagement exclusion is narrowly tailored to serve a compelling government interest. The court explained that the Lanham Act serves two primary purposes: to protect the public by enabling it to purchase a product with confidence that the product comes from the source from which the public believes it to originate, and to protect the owner of the mark from misappropriation. The court found that the prohibition on registration of “disparaging” marks advances neither purpose.

To the contrary, the prohibition on registering disparaging marks was held to be a viewpoint-discriminatory regulation of private speech because the PTO’s decision-making process mandates refusal to register only those marks that may be interpreted as disparaging, whereas a non-disparaging use of a mark containing an otherwise offensive word or phrase would be entitled to registration. The court went on to explain that the disparagement exclusion would not withstand First Amendment scrutiny even if the trademark were characterized as mere commercial speech for which government regulations are entitled to greater deference. Ultimately, the court held that the disparagement provision of Section 2(a) of the Lanham Act is unconstitutional because the government “cannot refuse to register disparaging marks because it disapproves of the expressive messages conveyed by the marks.”

Ramifications of the appellate court's decision

This decision is important for several reasons, though its full impact may not be known immediately. First, the PTO and the Trademark Trial and Appeal Board no longer will be able to refuse registration upon a determination that a mark is disparaging. Second, virtually every state has adopted the Model State Trademark Act, which contains its own disparagement provision. The court’s decision may influence how state courts determine challenges to the state anti-disparagement provisions going forward. It may also influence the outcome of the high profile case involving the Washington Redskins trademark, which involves the same legal issues and which is currently pending before a different federal appeals court following the PTO’s cancellation of the Redskins mark. If that court reaches a different conclusion, the Supreme Court may weigh in down the road to resolve the split between the appellate courts.

As a practical matter, the PTO conceivably could seek to avoid the impact of this decision by focusing on (and possibly seeking to expand) other avenues for rejecting a mark’s registration. The court’s holding was limited to the “disparagement” provision of Section 2(a), but the statute also prohibits registration of “immoral” and “scandalous” marks, and the court expressly refrained from ruling on the constitutionality of those prohibitions. Much or all of the court’s analysis seemingly would apply to those prohibitions as well, and the court’s ruling opens the door to challenges to those prohibitions. In the meantime, however, the PTO foreseeably could re-characterize marks it deems offensive as “immoral” or “scandalous” rather than “disparaging,” on the basis that a mark that disparages a group of people necessarily is scandalous or immoral. Should the PTO employ such a strategy, courts likely would have to entertain constitutional challenges to those portions of Section 2(a) as well. Accordingly, it remains to be seen whether the PTO has truly been put out of the business of conditioning trademark protection on its own finding that a mark is inoffensive.